GLOBAL - Sovereign and Public Pension Reserve Funds (SPFs) have proven an increasingly important and popular method of investing, with global SPF assets worth in excess of $4.1trn in the 2006 fiscal year.
The OECD said the SPFs in New Zealand, Spain and Saudi Arabia had displayed the fastest growth - 45%, 27% and 24% respectively over the 2005-2006 fiscal period - while Norway's SPF had an assets-to-GDP ratio of 83%.
The report identified two clear types of SPF, which it defined as "funds set up by governments or social security institutions to contribute to the financing of pay-as-you-go pension plans."
The first type are "part of the overall social security system" and funded mainly via contribution surpluses. This category includes Denmark's Social Security Fund, the US Social Security Trust Fund and the Japan Government Pension Investment Fund.
The second type, "established directly by the government" and managed separately from the social security system, the report said, were funded through direct government transfers.
This type of SPF, which includes the Australia Future Fund and the New Zealand Superannuation Fund, is usually barred from making payments for several decades and is intended to meet future deficits of the retirement system.
The report also commented that while allocations alternative assets were increasing in popularity, they "still only accounted for a relatively small portion of total asets." As an example, at one end of the scale, the Korean National Pension Fund had only 1.2% of assets in alternatives.
The New Zealand Superannuation Fund, a relatively large alternative investor had 12.7% in the asset class.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers